ratiman Posted August 23, 2016 Share Posted August 23, 2016 This will be a short writeup: Dropbox IPO is going to be huge (500 million passionate users), BOX will come along for the ride. Link to comment Share on other sites More sharing options...
DCG Posted August 23, 2016 Share Posted August 23, 2016 I think online storage (& collaboration) is quickly becoming commoditized, and will quickly continue down this path. Google Drive and Microsoft already offer practically the same storage and tools for quick a bit less money. I view the online storage industry similar to online chat. Skype became real popular because they were early to market, but then other companies started offering the same service for free. There is very little that separates Box and Dropbox from other offerings at this point. To me, it seems like these are companies you really needed to get into as early investors. Not sure if these companies are planning on expanding into Services, but it seems like they are going to need another big revenue driver to continue to grow. There are some issues around switching providers (you need to download all your files and upload them to the new provider), but that is generally pretty easy. Link to comment Share on other sites More sharing options...
ratiman Posted August 28, 2016 Author Share Posted August 28, 2016 Microsoft recently reduced free storage from unlimited to 1 TB to 5 GB so there is a limit to how much free storage will be available. Box is really more of a content/document management software provider that probably breaks even on storage. The storage is a way to generate customer demand and a network effect at lower levels that eventually turns into an enterprise customer. The ability to say "we already have 300 users within your company" is a huge foot in the door. Competitors like Documentum don't offer syncing/collaboration and are in a death spiral. This is a good article about the Box approach to sales. http://www.businessinsider.com/box-ceo-aaron-levie-future-enterprise-sales-2016-8 "We obviously spend a lot on sales because we have to go into the GEs of the world and Eli Lilly’s of the world, but in all of those organizations they were already using Box," Levie added. "That's the future of selling: end users adopt it, then at a level past some usage threshold, the enterprise standardizes." Link to comment Share on other sites More sharing options...
ratiman Posted August 28, 2016 Author Share Posted August 28, 2016 https://www.gartner.com/doc/reprints?id=1-3B8JE1T&ct=160707&st=sb Link to comment Share on other sites More sharing options...
JayGatsby Posted August 30, 2016 Share Posted August 30, 2016 Microsoft recently reduced free storage from unlimited to 1 TB to 5 GB so there is a limit to how much free storage will be available. That might be true for personal users, but I think Microsoft still includes OneDrive as part of the Office365 / hosted microsoft exchange server subscription? Price erosion seems like a problem here. Seems like a commodity product for most users. I like the synch feature that not very unique. Link to comment Share on other sites More sharing options...
ratiman Posted August 30, 2016 Author Share Posted August 30, 2016 It's not a storage product for consumers. That's more what Dropbox and Microsoft do. That's not a small market - Dropbox generates about $150M from commodity storage just because users consider it so much easier to use. But that's not really what Box does. Box is providing a platform for enterprises to build applications on top of the snycing/storage. For instance, when you pay for an Uber, that transaction is built on Box. Don't ask me what that means exactly, but increasingly its replacing older and more expensive content and document management vendors like Documentum, Interwoven etc. Its true that Microsoft Sharepoint is widely used and competes with Box but Sharepoint has existed for a long time without crushing Box. Lots of companies will have five or six legacy content mangement systems and Box will either be used to replace them or share information between each of them. So it's really an enterprise software company that also lets you sign up and get 5 GB of storage. The real genius of that is that Box sales rep doesn't have to go into a company and say, hey, buy a $1M software license and hire Accenture to do an expensive implementation and by the way, it might just sit on your shelf because there was no user adoption. That's the old model. The users are already adopting it before the sales rep even talks to the CIO. That's how AWS grew so rapidly, the developers were already using it and paying for it with a credit card. The typical Box enterprise contract is pretty small but grows rapidly as more and more users adopt the product and new applications are built on top of the syncing/storage, what Box calls the land and expand strategy. It's true that right now the marketing and sales expense is huge. Partly that's because the cost of storage is included in sales and marketing (as part of the freemium strategy, storage is a marketing expense). If you move the free storage expense (11% of revenues) over to COGS and figure that storage expense will decline indefinitely, then sales and marketing expense looks much more reasonable and in line with revenue growth. Link to comment Share on other sites More sharing options...
Grenville Posted October 25, 2016 Share Posted October 25, 2016 Nice interview with Aaron Levie by Zillow group CEO http://www.zillow.com/office-hours/aaron-levie/ Link to comment Share on other sites More sharing options...
saltybit Posted September 5, 2018 Share Posted September 5, 2018 What do you guys think of where Box is right now? Given it's smallish market cap, I think it could be an acquisition target for someone given their established relationships with a lot of enterprises. They had a small miss for the previous quarter, and as a result the stock went down by a bit, potentially making a good entry point. The Social Capital founder (Chamath) also laid out a thesis for Box here, though I think he's extrapolating a bit too far https://www.cnbc.com/2018/04/23/tech-hedge-fund-manager-palihapitiya-reveals-bet-on-box-at-sohn-conference.html Link to comment Share on other sites More sharing options...
wisowis Posted September 5, 2018 Share Posted September 5, 2018 What do you guys think of where Box is right now? Given it's smallish market cap, I think it could be an acquisition target for someone given their established relationships with a lot of enterprises. They had a small miss for the previous quarter, and as a result the stock went down by a bit, potentially making a good entry point. The Social Capital founder (Chamath) also laid out a thesis for Box here, though I think he's extrapolating a bit too far https://www.cnbc.com/2018/04/23/tech-hedge-fund-manager-palihapitiya-reveals-bet-on-box-at-sohn-conference.html Chamath is completely out to lunch, his presentation is nearly nonsensical. I've worked on a team that has tried to integrate with their platform. Their tech is not good; poor architecture, unhandled upload/download exceptions. Pretty shocking from a company whose core competency is data upload/download. Enterprise is shifting to OneDrive. In general, I don't see how this kind of business should command high margins in the future, competition will be fierce. Only way you win is if someone buys them. Link to comment Share on other sites More sharing options...
iambagman Posted September 6, 2018 Share Posted September 6, 2018 The company has a customer retention rate of 95% and even higher for customers that have an additional module. How do you square that with a terrible product / the world migrating to Onedrive? Link to comment Share on other sites More sharing options...
FocusedCompounding Posted September 8, 2018 Share Posted September 8, 2018 I made this write-up free for anyone who wants to read it on Box. https://focusedcompounding.com/box-box-negative-earnings-and-free-cash-flow-disguise-beautiful-customer-economics/ Link to comment Share on other sites More sharing options...
valueinvestor Posted March 18, 2020 Share Posted March 18, 2020 I made this write-up free for anyone who wants to read it on Box. https://focusedcompounding.com/box-box-negative-earnings-and-free-cash-flow-disguise-beautiful-customer-economics/ This may seem to be a winner - market realizing in a new world paradigm of outbreaks remote access is more valuable then ever. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now